How limiting deceptive practices harms consumers

• Autores: Salvatore Piccolo, Piero Tedeschi, Giovanni Ursino
• Localización: The Rand Journal of Economics, ISSN-e 1756-2171, Vol. 46, Nº. 3, 2015, págs. 611-624
• Idioma: inglés
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• Resumen

  • There are two competing sellers of an experience good, one offers high quality, one low. The low-quality seller can engage in deceptive advertising, potentially fooling a buyer into thinking the product is better than it is. Although deceptive advertising might seem to harm the buyer, we show that he could be better off when the low-quality seller can engage in deceptive advertising than not. We characterize the optimal deterrence rule that a regulatory agency seeking to punish deceptive practices should adopt. We show that greater protection against deceptive practices does not necessarily improve the buyer welfare